Carve-Up Controversy Riles Tennessee Craft Brewers

ALCOA, TN — A proposed change to the state’s alcohol regulation laws has Tennessee craft brewers suspicious that legislators are creating a soft landing for an out-of-state beer maker.

Amendments to bill SB1224, designed to overhaul the state’s liquor rules, would allow three brewers in the state the right to produce beers with greater than 6.2 percent ABV as part of a “pilot project.” The bill carves out three “Grand Divisions” across the state (East, Middle and West Tennessee), and permits only one brewer per division the right to brew high-strength beers.

Higher-alcohol styles of beer have become increasingly popular as craft beer has grown nationwide, and Tennessee’s local brewers would like the ability to tap into the growing market. But they say that the amendment is instead designed to entice the Chico, Calif.- based craft brewer, Sierra Nevada, to expand its manufacturing operation to Alcoa.

When asked about the proposed changes, Sierra Nevada claimed that it had not been involved in the way the amendments were written.

“We really had no input on what the amendments would be,” said Bill Manley, the Communications Coordinator for Sierra Nevada. “We are uncomfortable with the current exclusionary language and hope that at the end of the day, Tennessee is a more favorable place for breweries and the craft beer community as a whole.”

Currently, only one brewer in the state is permitted to produce beers over 6.2% ABV. Yazoo Brewing actually received a distillers’ permit last year to allow it to become the only brewer in the state to produce ‘high-gravity’ beer. Such permits are more commonly associated with spirit alcohol operations and are typically complicated to obtain.

In a statement issued on the brewery’s blog, Yazoo Brewing owner Linus Hall wrote that he can see both pros and cons to the bill, but admits that limiting the production of higher ABV beers to just three brewers is not fair.

“The bad: well, that’s obvious. It only authorizes three brewers to be part of this ‘pilot project’.” He writes. “I don’t like that part of the bill, but I feel that after a year, the ABC director can report positively on the ‘pilot project’ and the legislature can open the license to all brewers.”

The bill, as originally introduced, decreases from two to one the number of years that an individual, shareholder, or transferee must reside in Tennessee following an application for a retail liquor store license; decreases from 10 to five the number of years that an individual, shareholder or transferee must have resided in Tennessee to receive a retail liquor store license.

However, many Tennessee craft brewers fear that if passed, the proposed changes would leave them at a competitive disadvantage to the likes of Sierra Nevada, Yazoo Brewing and a third brewer — which many speculate is the contract brewer City Brewing, who recently purchased an old Coors site in Memphis.

Sierra Nevada and Yazoo Brewing have been outspoken on the issue, both claiming they have had no input in the bill.

“The bottom line here is that the state of Tennessee is trying to make itself as attractive as possible to us as a potential new business,” Manley said. “We may have provoked the bill that is currently under consideration, but we certainly had very little part in how it shaped out.”

Hall echoed those statements in his blog post, saying that Yazoo “had ZERO input on this billÔÇª”

According to Manley, Senate Finance Committee members met yesterday and began drafting a third amendment that would either allow all craft brewers the ability to brew high-ABV beers, or return the bill to its initial language.

Brewbound.com will continue to provide coverage as this story develops.